FIN 341 – Quiz#3 – Based On Exercise#3

Due Date – To Be Determined

Calculate the annual % return from the following capital gain problems.

1. An investor bought $14,000 worth of McDonald’s shares 5 years ago, and today they are worth $30,000. ($30,000/$14,000)^1/5 – 1 = ($30,000/$14,000)^.20 – 1 =

(2.14)^.20 - 1 = 1.1643 – 1 = .1643 = 16.43% annual % return

2. An investor bought $35,000 worth of Wal-Mart shares 10 years ago, and today they are worth $60,000. ($60,000/$35,000)^1/10 – 1 = ($60,000/$35,000)^.10 – 1 =

(1.71)^.10-1 = 1.05511 – 1 = .05511 = 5.51% annual % return

3. An investor bought $60,000 worth of Wells Fargo shares 20 years ago, and today they are worth $155,000.($155,000/$60,000)^1/20 – 1 = ($155,000/$60,000)^.05 – 1 = (2.58)^.05-1 = 1.04853 – 1 = .04853 = 4.85% annual % return

4. An investor bought $12,000 worth of Nike shares 15 years ago, and today they are worth $50,000.($50,000/$12,000)^1/15 – 1 = ($50,000/$12,000)^.067 – 1 = (4.17)^.067-1 = 1.1004 – 1 = .1004 = 10.04% annual % return

5. An investor bought $7,000 worth of Vanguards Wellington mutual fund 12 years ago, and today they are worth $20,000.($20,000/$7,000)^1/12 – 1 = ($20,000/$7,000)^.083 – 1 = (2.86)^.083-1 = 1.0911347 – 1 = .0911347 = 9.11% annual % return

6. An investor bought $20,000 worth of Vanguards Windsor mutual fund 25 years ago, and today they are worth $200,000.($200,000/$20,000)^1/25 – 1 = ($200,000/$20,000)^.04 – 1 = (10)^.04-1 = 1.0964782 – 1 = .096478 = 9.65% annual % return

7. An investor bought $45,000 worth of Tucker Rhino mutual fund 28 years ago, and today they are worth $300,000.($300,000/$45,000)^1/28 – 1 = ($300,000/$45,000)^.0357 – 1 = (6.67)^.0357-1 = 1.07009 – 1 = .07009 = 7.01% annual % return

8. An investor bought $10,000 worth of Tucker Trucker mutual fund 20 years ago, and today they are worth $80,000.($80,000/$10,000)^1/20 – 1 = ($80,000/$10,000) ^.05 – 1 = (8)^.05-1 = 1.109569 – 1 = .109569 = 10.96% annual % return

9. An investor bought $8,000 worth of Vanguards Washington mutual fund 35 years ago, and today they are worth $220,000.($220,000/$8,000)^1/35 – 1 = ($220,000/$8,000) ^.029 – 1 = (27.5)^.029-1 = 1.10088 – 1 = .10088 = 10.09% annual % return

10. An investor bought $6,000 worth of Vanguards Willow mutual fund 30 years ago, and today they are worth $250,000.

($250,000/$6,000)^1/30 – 1 = ($250,000/$6,000) ^.033 – 1 = (41.67)^.033-1 = 1.13097 – 1 = .13097 = 13.1% annual % return

11. An investor bought $16,000 worth of Coca-Cola shares 15 years ago, and today they are worth $64,000.($64,000/$16,000)^1/15 – 1 = ($64,000/$16,000) ^.067 – 1 = (4)^.033-1 = 1.04681 – 1 = .0468 = 4.68% annual % return

12. An investor bought $20,000 worth of Home Depot shares 25 years ago, and today they are worth $86,000.($86,000/$20,000)^1/25 – 1 = ($86,000/$20,000) ^.04 – 1 = (4.3)^.04-1 = 1.06008 – 1 = .06008 = 6.01% annual % return

13. An investor bought $40,000 worth of IBM shares 10 years ago, and today they are worth $152,000.($152,000/$40,000)^1/10 – 1 = ($152,000/$40,000) ^.1 – 1 = (3.8)^.1-1 = 1.14282 – 1 = .14282 = 14.28% annual % return

14. An investor bought $50,000 worth of Ta shares 20 years ago, and today they are worth $125,000.($125,000/$50,000)^1/20 – 1 = ($125,000/$50,000) ^.05 – 1 = (2.5)^.05-1 = 1.04681 – 1 = .0468 = 4.68% annual % return

15. An investor bought $25,000 worth of Sears shares 15 years ago, and today they are worth $8,000.($8000/$25,000)^1/15 – 1 = ($8,000/$25,000) ^.067 – 1 = (.32)^.067-1 = .9264992 – 1 = -.0735008 = -7.35% annual % return

16. An investor bought $100,000 worth of Best Buy shares 5 years ago, and today they are worth $40,000.($40,000/$100,000)^1/5 – 1 = ($40,000/$100,000) ^.2 – 1 = (.4)^.2-1 = .832553207 – 1 = -.16744 = -16.74% annual % return

17. An investor bought $125,000 worth of J.C. Penney shares 30 years ago, and today they are worth $15,000.($15000/$125,000)^1/30 – 1 = ($15,000/$125,000) ^.033 – 1 = (.12)^.033-1 = .93242 – 1 = -.067576 = -6.76% annual % return

18. An investor bought $100,000 worth of Radio Shack shares 25 years ago, and today they are worth $20,000.($8000/$25,000)^1/15 – 1 = ($8,000/$25,000) ^.067 – 1 = (.32)^.067-1 = .9264992 – 1 = -.0735008 = -7.35% annual % return

19. An investor bought $150,000 worth of Tiger company shares 22 years ago, and today they are worth $25,000.

($25000/$150,000)^1/22 – 1 = ($25,000/$150,000) ^.045 – 1 = (.2)^.045-1 = .930135 – 1 = -.069864 = -6.99% annual % return

20. An investor bought $80,000 worth of Leopard company shares 20 years ago, and today they are worth $10,000.($10,000/$80,000)^1/20 – 1 = ($10,000/$80,000) ^.05 – 1 = (.125)^.05-1 = .90125 – 1 = -.098749 = -9.87% annual % return

END – FIN 341 – QUIZ#3 – Dr. Tucker